As the world's largest Taobao clothing producer, China's Taobao clothing industry (5.94, 0.15, 2.59%) also finds it difficult to remain unscathed. According to the latest statistics from customs data, in the first ten months of 2011, the export value of Taobao clothing was $12.2 billion, with a growth rate of only 6%. This indicates that the export situation for China’s Taobao clothing industry is not optimistic. With external trade facing obstacles, the demand for traditional Taobao clothing export companies to switch from exports to domestic sales will be unprecedentedly strong. Moreover, the continued sluggishness of the European and American markets has forced major European and American Taobao clothing brands to desperately seek opportunities in emerging markets led by China. In 2011, international brands made frequent moves to enter the second- and third-tier markets in China, and it can be expected that within the next 3-5 years, the competition between international and domestic brands in these second- and third-tier markets will be unprecedentedly fierce, bringing significant shocks to the existing market structure.
At the same time, with the domestic tightening monetary policy implemented to curb inflation, the financing prospects for China’s Taobao clothing enterprises are unlikely to see substantial improvement. Many domestic Taobao clothing brand companies are seeking listings both domestically and internationally, but the actual situation is not optimistic. Additionally, the pressure of rising costs for Taobao clothing enterprises is significant, which will seriously affect the profitability of Taobao clothing enterprises.
In summary, faced with internal and external challenges, the crisis for China's Taobao clothing industry in 2012 is gradually becoming apparent. How to extricate ourselves from numerous objective difficulties and how to stand out in the complex and intense competitive environment are issues we in the industry must face.
First change: Steadfastness. Running fast is not as important as running long; the story of the tortoise and the hare has already told us that business operations should avoid being overly eager for quick results, as haste makes waste. Many enterprises do not fall at the hands of their competitors, but rather struggle due to their own actions. For domestic Taobao clothing enterprises, adopting a strategy of steady growth in the face of the complex year of 2012 is essential.
Financially, since increasing revenue is difficult, cost control becomes very important. Whether it is production costs, marketing costs, or labor costs, we need strict control to improve the efficiency of every dollar spent. Furthermore, due to the pressure of inflation, public consumption capacity is suppressed, and there is concern about the market outlook for the coming period. A wise move for Taobao clothing enterprises in China next year might be to strictly control inventory levels and enhance the efficiency of accounts receivable recovery. Both enterprises themselves and dealers/agents must pay full attention to cash flow turnover, as this is a matter of life and death. Additionally, through deep expansion via factory outlets and other channels, inventory can be further digested.
Second change: Focus. The foundation or core competitiveness of Taobao clothing enterprises still lies in earnestly producing good products and solidly building brands. Under a crisis, it is also an assessment of focus. For a company to survive and develop under severe external conditions, it must focus and not try to do everything. The line of operation should not be stretched too long, otherwise, it may lead to neglecting one thing for another. In this regard, the strategic thinking of enterprises comes into play—strategy is about deciding what to do and what not to do.
From the current overall situation of China's Taobao clothing industry, many enterprises are still in a relatively low-level stage of product and price competition. As competition intensifies and deepens, and with the reshuffling effect caused by the economic crisis, it is believed that those enterprises focusing on brand building and dedicated to product research and development will emerge from this competition and reshuffling.
Third change: Innovation. During the growth process of brands and products, persistently innovating is a matter of great strategic significance. Innovative fashion designs, innovative technological fabrics, and innovative manufacturing processes will make our product quality increasingly competitive.
Of course, if we think reversely, the current crisis presents excellent development opportunities for some enterprises with stronger financial strength. Through various means such as acquisitions, equity participation, and strategic cooperation, they can integrate upstream and downstream industrial chains related to their business, thereby obtaining greater value-added opportunities and profit margins.
This article comes from Fashion Coordination Network (http://www.daban.org.cn). Please indicate the source when reprinting.